Lockheed Martin shares nosedive after Donald Trump criticises cost of F-35 fighter plane project
Updated
Shares of Lockheed Martin fell by nearly $US2 billion ($2.67 billion) after President-elect Donald Trump tweeted that the cost of production for the F-35 fighter planes was "out of control".
Key points:
- Lockheed makes the F-35 fighter aircraft and is a major US defence contractor
- Fighter plane program supports more than 146,000 US jobs, company's website says
- F-35 comments follow Trump's tweet last week that costs to build new presidential planes are "out of control"
Shares of other defence contractors, including Raytheon and Northrop Grumman, also tumbled.
Mr Trump did not mention any specific company in his tweet, but Maryland-based Lockheed makes the F-35 one-seat fighter aircraft and is a major US defence contractor.
"The F-35 program and cost is out of control," Mr Trump said on Twitter, echoing campaign promises to cut waste in federal spending.
The F-35 program made up 20 per cent of Lockheed's total 2015 revenue of $US46.1 billion ($61 billion), and US government orders made up 78 per cent of its revenue last year.
The F-35 program directly or indirectly supports more than 146,000 US jobs, according to the company's website.
In a statement on Monday (local time), Lockheed said it had worked to lower the price of the F-35 by more than 60 per cent and it expected the aircraft to cost $US85 million ($113 million) in 2019 and 2020.
"We welcome the opportunity to address any questions the President-elect has about the program," F-35 program general manager Jeff Babione said.
"It's an amazing program."
Lockheed Martin Corp shares fell 2.5 per cent to close at $US253.11 ($337.91).
Meanwhile, shares of Raytheon Co dropped 1.7 per cent to $US143.81 ($192), Northrop Grumman Corp fell 2.7 per cent to $US232.07 ($309.82), General Dynamics Corp fell 1 per cent to $US173.74 ($231.95) and Boeing Co bucked the trend, adding 67 cents to $US157.16 ($209.81).
Trump using Twitter to shoot down Boeing
This is the second time in a week Mr Trump has blasted US aircraft spending. He tweeted last week that costs to build new presidential planes by Boeing were "out of control" and ended the tweet with "Cancel order!"
The new administration's focus is likely to be "wide-reaching and impact all of Government as we look to come up with better deals," Trump transition spokesman Jason Miller said.
"We're going to look for opportunities to go back through and make sure that we're not getting taken advantage of."
Mr Trump's F-35 tweet drew support from US Senate Armed Services Committee Chairman Senator John McCain, who has voiced support for the fighter jet in the past.
While a president cannot cancel a program after funds have been allocated, it can purchase less.
"He can reduce the buy over time, next year, as we look at it again," Senator McCain said.
But Mr Trump's off-the-cuff remarks bristled others in Congress.
Senator Richard Blumenthal, a Democrat from Connecticut, home to F-35 engine-maker Pratt & Whitney, said the program supports 2,000 jobs at the manufacturer and thousands more at suppliers.
"The suggestion that costs are out of control is just plain wrong," Senator Blumenthal said.
He also said Mr Trump should "learn more about the facts" before discussing "arbitrary cuts in the program".
"He's the president-elect. What he says matters," he said.
Pyne says Australia still committed
The Federal Government is preparing to spend $17 billion on 72 F-35 aircraft, with the first expected to arrive in Australia in 2018 and enter service in 2020.
Speaking to reporters in London, Defence Industry Minister Christopher Pyne said the JSF was right for Australia and the United States, despite Mr Trump's criticism.
"Whether it has been efficiently managed from the United States' point of view in terms of their cost and delays and so on is really a matter for them and for President-elect Trump's opinion," he said.
AP/Reuters
Topics: government-and-politics, business-economics-and-finance, defence-industry, defence-and-aerospace-industries, us-elections, markets, united-states
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